Page 51 - Banking Finance November 2021

ARTICLE

As per RBI, the application for setting up an NUE shall Y Tata, Kotak Mahindra Bank, HDFC Bank, Nabard,
contain a detailed business plan covering the payments Mastercard and Flipkart
system proposed to be set up and or operated with other Y Paytm, Ola Financial, IndusInd Bank, PolicyBazaar and
documents to establish its experience in the payment Zeta
ecosystem.
Y Amazon, ICICI Bank, Axis Bank, Pine Labs, BillDesk and
Such a business plan shall include technology, security Visa
features, market analysis/research, benefit, if any, of such Y SBI- BOB - HDFChad applied for NUE framework which
payment system, operational structure of the payment the finance ministry red flagged citing reasons that it
system, the time period for set up of the payment systems would affect the working of NPCI (nonprofit) who is
and proposed scale of operation, etc. The proposed majorly dealing with management of payment and
organizational strategy with respect to fulfilling its settlement in country.
responsibility as an umbrella entity will also be included in Y Various Bank Union and other associations have opposed
the business plan. the setup of NUE and licenses to the corporates as it

would defeat the very principle of equity and fairness
Application process in the payment and settlement system.

If NPCI in existence then why NUE?
Y Any new entrant in the business having no legacy
issues, will have the zeal as well as the flair to innovate
and try new solutions. NPCI innovated on P2P payments,
brought UPI on top of the IMPS rails. It also brought
Once an entity applies for the license of NUE, scrutiny of FAStags, RuPay cards, AePS payments and much more.
the applications shall be undertaken by the External
Advisory Committee (EAC). The committee shall provide its Y NPCI has come to dominate the space
recommendations to the Reserve Bank of India. Board for Y If India gets two or three such bodies, it will mean more
Regulation and Supervision of Payment and Settlement innovation. The RBI has mandated interoperability
Systems (BPSS) shall be the final authority for issuing between NPCI and new players, so consumers will not
authorization for setting up of NUE. The Reserve Bank shall be affected and instead will have more choices.
complete the process within a six months period.

Benefits of Establishing NUE
Y Once established, these newly authorized entities will
be able to operate their own clearing and settlement
systems.
Y Establish new standards and technologies

Y Develop innovative new payment systems that enhance
customer access, convenience and safety.
Y All NUEs will have to be interoperable with the National
Payments Corporation of India (NPCI).

Recent Developments
Four major consortiums have applied for the NUE licences.
These include:
Y Reliance Industries, Infibeam Avenues, Facebook and
Google

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